Korea's Harim to divest of Hanjin KAL shares to fund HMM acquisition

South Korea’s poultry processing company Harim Group is set to sell off all its Hanjin KAL Co. shares its affiliate owns to secure capital for the acquisition of HMM, the country’s top container ship operator.

Harim’s shipping affiliate Pan Ocean Co. will divest of all its shares in Hanjin KAL, or a 5.8% stake, for 162.8 billion won ($120.3 million) to secure a return on its investment, according to its regulatory filing on Monday.  

Pan Ocean will execute the transaction within five business days from the date when the buyer completes the administrative process for the share acquisition. It will revise the disclosure when the transaction date is confirmed, the Kospi-listed shipping firm said.

From May to September 2022, Pan Ocean bought a 0.59% stake in Hanjin KAL, the holding firm of flag carrier Korean Air Lines Co., at 20.1 billion won. Then, the shipping firm purchased an additional 0.21% stake in Hanjin KAL at an undisclosed amount of capital.

In December 2021, Pan Ocean acquired an additional 5% stake in Hanjin KAL from Hoban Construction Co. at 125.9 billion won, raising the ownership to 5.8%.   

Harim aims to fund the acquisition of HMM by selling off Hanjin KAL shares via the shipping affiliate, market insiders say.

The bidders for HMM were shortlisted to a consortium led by Harim and local consulting firm JK Partners, logistics-to-trading conglomerate LX Group and canned tuna producer Dongwon Industries Co. in August. 

State-run Korea Development Bank (KDB) and Korea Ocean Business Co. (KOBC), the key shareholders of HMM, will pick the preferred bidder in November after two months of due diligence.

Harim can raise about 2.5 trillion won-3 trillion won of cash and cash equivalents on its own, while the major shareholders of HMM are asking for about 7 trillion won of the sale price, market insiders said.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

Jihyun Kim edited this article.